Global withholding taxes

Transcription

1 Global withholding taxes Summary of worldwide taxation of and gains derived from listed securities 2018 update Year-end 2017 kpmg.com 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. Printed in the U.S.A. The KPMG name and logo are registered trademarks or trademarks of KPMG International. NDPPS

2 Global Trading Tax (GTT) Services are provided by highly skilled and experienced professionals from KPMG LLP (KPMG), the U.S. member firm of KPMG International, who focus on international tax issues that confront the alternative investment industry. We draw upon decades of cumulative alternative investment industry experience gained working within the private sector, government, and top professional service organizations. This enables us to identify, understand, and analyze issues with a high degree of skill and from a multitude of perspectives. As a result, KPMG is a leader in its ability to deliver top-level GTT Services that are at once practical, business-oriented, relevant, and operational. The attached chart summarizes taxation of and gains derived from listed securities in a number of markets around the world as of December 31, This information, which is from the KPMG International member firm in each respective country in the chart, provides a general outline and should not be relied upon for purposes of structuring transactions or making investments. Please note that while every effort has been made to provide up-to-date information, tax laws around the world are constantly changing. Accordingly, the material contained in this publication should be viewed as a general guide only and should not be relied upon without consulting your KPMG International member firm tax adviser. Further, the assumptions noted below should be considered in context of the summary information provided for each market. Assumptions and additional notes: 1. Except where otherwise noted, this chart does not apply to (i) privately held (unlisted) securities, (ii) portfolio companies whose assets consist largely of real estate, or (iii) portfolio companies in which the fund is a substantial shareholder (e.g., an owner of 10% or more of the share capital). 2. Except where otherwise noted, this chart reflects the gains tax rules related to equities. The gains tax rules related to debt instruments are complex. In some countries, gains from the sale of debt instruments may be treated as interest and taxed accordingly. 3. The chart assumes that the investing entity provides all required documentation to the portfolio company and the local tax authorities to certify its tax residency status. 4. Reduced dividend withholding s for substantial shareholdings (typically ownership of 10% or more of the portfolio company s share capital) are assumed not to apply. 5. For purposes of performing an analysis of financial statement exposure, it may be necessary to determine the foreign tax s that applied in prior years. This chart reflects only current s. 6. This chart does not account for the possibility that all or a portion of any cash distribution may be considered a nontaxable return of capital under local laws. 7. This chart does not address other applicable transaction taxes applied to the gross value of the transfer that are not considered withholding taxes. 8. Some European countries have enacted a financial transaction tax. These taxes are imposed on all financial transactions and are not addressed in this publication. 9. It is assumed that the investing entity does not carry on a trade or business through a permanent establishment in the country where the portfolio company is organized. 10. For withholding tax purposes, some countries may not apply look-through treatment to a master fund that is treated as a partnership for U.S. tax purposes. 11. Local laws in some countries that impose gains tax on nonresidents may not address the treatment of short positions. 12. Swaps and other derivative transactions may need to be examined on a case-by-case basis in each jurisdiction, considering local antiabuse provisions and case law.

3 Global taxes Argentina tax Gains 15% or Exempt No N/A Effective September 23, 2013, gains from disposition of securities may be taxed at 15% (alternatively 13.5%, i.e., 15% tax x 90% gross proceeds). However, beginning January 1, 2018, gains likely exempt. Dividends 35% or Exempt N/A As a general rule, dividends paid to nonresident s should not be subject to any withholding tax as long as the profits distributed were already taxed under Argentine law. However, a 7% withholding tax should apply for distributions on profits accrued from January 1, 2018 through December 31, 2019, and a 13% withholding tax from January 1, 2020 onward. If the distribution is made from earnings that have not been previously subject to Argentine corpo tax, a 35% "equalization" tax should be applied. Interest Exempt, 15.05%, or 35% N/A Interest on government bonds and corpo bonds issued through a public placement may be exempt; issuance documentation should be reviewed. Otherwise, interest arising may be subject to 35% withholding tax, including private placement, although this may be reduced to 15.05% in certain circumstances (e.g., if the borrower is a qualifying financial institution). 1

4 Australia tax Gains 30% or Exempt Yes 30% or Exempt Dividends Exempt or 30% Exempt or 15% Gains likely to be subject to a 30% tax to the extent trading activities are considered as under revenue account, however, if the investment fund meets certain requirements an exemption may be available. If not revenue account, gain may be exempt. Under the tax treaty, no tax should apply unless it is a real property company or the nonresident has a permanent establishment. Dividends paid by an Australian corporation to a nonresident out of earnings that were previously subject to Australian corpo tax ( franked dividends) should be exempt, whereas dividends paid to a nonresident out of earnings that were not previously subject to Australian tax (i.e., unfranked dividends) should be subject to withholding tax at 30% or, if applicable, tax treaty. Certain unfranked dividends paid to nonresidents may be exempt from dividend withholding tax under the conduit foreign rules. Interest 10% or Exempt Same as Nontreaty Rate Interest should generally be subject to a 10% withholding tax. Interest is defined to generally include gains from the sale or redemption of discounted, deferred-interest and similar securities. Interest on government bonds and publicly offered debt instruments should generally be exempt. 2

5 Austria tax Gains Exempt or 27.5% Yes Exempt Generally exempt but may be subject to 27.5%. Dividends 27.5% 15% Interest Exempt or 27.5% 0% Effective January 1, 2017, the rules cover interest from cash deposits in Austrian banks and Austrian bonds in case there is a withholding tax deduction. The nonresident interest taxation does not apply to corpo s and investment funds. Belgium tax Gains Exempt Yes Exempt Dividends 30%, 15%, or 5% 15% Effective January 1, 2017, the statutory withholding should be 30%. 15% reduced may apply for dividends distributed by Belgian small and middle-sized entities (SMEs) provided conditions are met. 5% may apply to dividends distributed by SMEs on certain reserves provided certain conditions are met. Interest 30%, 15%, or Exempt 15% or Exempt Effective January 1, 2017, the statutory withholding on interest should be 30%. A 15% should apply on government bonds issued and subscribed between November 24, 2011 and December 2,

6 Bermuda tax Gains Exempt No N/A Dividends Exempt N/A Interest Exempt N/A Brazil tax Gains 15% or Exempt No N/A Gains should be taxable unless specific exemption applies. Dividends 15% or Exempt N/A Dividends generally exempt but may be subject to 15% tax in limited circumstances. Interest 15% to 22.5% or Exempt N/A For fixed- securities, the tax should range from 15% to 22.5% depending on the holding period. Nontax-haven s should be subject to a 15% withholding tax. 4

7 Bulgaria tax Gains Exempt or 10% Yes Exempt Gains from qualifying investment funds and certain financial instruments should be exempt. Otherwise a 10% tax should apply. The capital gain may be exempt under the Double Tax Treaty (DTT) with the United States in some cases. Dividends 5% 5% Generally 5%. However, a 0% withholding tax may apply on dividends distributed to entities that are resident in an European Economic Area (EEA)/EU Member States. Tax States provides for a 5% withholding tax unless qualifying pension plans (0%). Interest 0% or 10% 0% or 5% Generally 10%. However, since 2015, a 0% WHT may apply to interest paid to EUrelated parties. An exemption may also apply on interest derived from corpo and government bonds, and debt instruments, listed on a regulated stock exchange in the EU/EEA. U.S. tax treaty should provide for a 5% WHT ; 0% for? qualifying financial institutions and pension plans. Canada tax Gains Exempt or 25% Yes Exempt or 25% Gains generally exempt but may be taxed at a 25% if taxable Canadian property. Most of Canada s treaties do not exempt gains arising from the disposition of taxable Canadian property. Dividends 25% 15% or 5% Interest Exempt or 25% Exempt or 15% Generally subject to a 25% withholding tax unless exemption applies. Treaty exemption does not apply to certain participating debt interests. 5

8 Chile tax Gains Dividends Exempt or 35% 35% Pending (Treaty signed February 4, 2010, but not yet in force) N/A N/A Exemption may apply if publicly traded and certain conditions are met. Otherwise, the applicable should be 35%. Interest 35% or 4% N/A Generally 35% withholding tax. A of 4% may apply to interest paid on loans granted by foreign financial institutions, banks, or insurance companies and pension funds (if certain requirements are met). 6

9 China Gains Dividends 10% or Exempt (Uncertain) 10% or Exempt (Uncertain) tax Yes No 10% withholding tax should generally apply. Circular 79 should provide a temporary exemption since November 17, 2014 for gains on A shares. It clarified that gains realized by Qualified Foreign Institutional Investors and RMB Qualified Institutional Investors prior to November 17, 2014 were taxable and should be reported in accordance with the Corpo Income Tax Law. The tax situation in China is fluid and should continue to be monitored closely for developments. 10% Dividends paid out of pre-2008 profits relating to B and H shares should be exempt from? withholding tax. For withholding tax implication of pre-2008 A share dividends, there is regulatory ambiguity and inconsistency in practice. Interest 10% 10% Interest on certain government debt should be exempt. Colombia Gains Exempt or 40%, (37% in FY 2018 and 33% in FY 2019 and onwards) tax No N/A Gains realized on the disposition of publicly traded shares should be taxed at 40% (37% in FY 2018 and 33% in FY 2019 and onwards) if the nonresident sells 10% or more of the outstanding shares in the same year. Otherwise it may be exempt. Dividends 5% or 28.75% (For distributions after January 1, 2017) N/A Dividend distributions out of pre-cit profits should be subject to a 28.75% withholding tax. Otherwise, a 5% withholding tax should apply. Interest 0%, 14%, 15% or 25% N/A 7

10 Croatia tax Gains Exempt No N/A Dividends 12% N/A As of March 1, 2012, dividends paid to nonresident companies should be subject to a withholding tax of 12%. The tax should not apply to distributions of profits earned before March 1, Interest 15% or Exempt N/A 15% should be the standard withholding tax imposed on interest payments. No tax should apply to interest on government or corpo bonds. Cyprus tax Gains Exempt Yes N/A. Dividends Interest None None N/A N/A 8

11 Czech Republic tax Gains 1% and 19% Yes Exempt A 1% of the sales proceeds withholding tax should apply to payments to foreign s domiciled in a non-eu/eea country when the payment abroad is made by a Czech payer, which would likely be credited against the 19% tax liability. Dividends 15% or 35% 15% Since January 1, 2013, 35% withholding tax should apply on payments to non-eu/eea residents where no tax treaty or exchange of information agreement is in place, or to undisclosed recipients. Since 2014, the Czech Republic-Cayman Islands Exchange of Information Agreement became effective. Thus, the applicable withholding tax should be 15% (provided that beneficial ownership and tax residency are substantiated). Interest 15% or 35% Exempt Same note as dividends (above) should apply. Denmark tax Gains None Yes N/A Dividends 27% or 15% 15% Outbound dividend payments should be subject to the withholding tax of 27%. 15% should apply if the recipient owns less than 10% of the distributing company and is a resident in a jurisdiction that exchanges tax information with Denmark (including ). Interest Exempt or 22% 0% The interest withholding tax should be subject to a number of exceptions, including when the recipient/beneficial owner is domiciled in a treaty jurisdiction. In general, interest on controlled debt should be subject to the withholding tax of 22%. 9

12 Egypt Gains 10% ( suspension is currently in force) tax Yes Exempt Effective July 1, 2014, a 10% tax should apply on gains realized by nonresident s upon the disposal of listed Egyptian shares and bonds. However, the implementation of this provision was suspended until May 16, No tax should be withheld during this period. U.S.-Egypt treaty: gains should generally be exempt under the treaty except in the case of real estate entities. Dividends 5% or 10% N/A A 10% withholding tax generally should apply on dividends. A 5% may apply where ownership in the distributing entity exceeds 25% of the share capital or voting rights, provided the participation is held for a minimum 2-year period. Interest 32%, 20%, or Exempt 15% 32% should apply to interest paid on government bonds issued by the Ministry of Finance on behalf of the Central Bank. An exemption from withholding tax may apply to certain types of interest, including interest on bonds listed in the official schedules at the Egyptian stock exchange and interest received by corpo entities on securities and deposits certificates issued by the Central Bank of Egypt. A 20% should apply to interest on treasury bills issued on May 5, 2008 onwards. Interest on treasury bonds issued on July 1, 2008, onwards should also be subject to tax at 20% tax. 10

13 Estonia tax Gains Exempt or 20% Yes Exempt Gains realized on the disposition of shares should be generally exempt unless a real estate company, which may be taxed at 20%. Dividends Exempt or 20% 15% Dividends should be generally exempt. However, the distributor should be subject to distribution tax at the of 20%. Interest Exempt or 20% N/A The 20% withholding tax applies only to the portion of interest paid that exceeds the market interest. Otherwise, interest payments should be exempt from withholding tax. Finland tax Gains Exempt Yes Exempt Dividends 20% 15% Interest Exempt N/A Effective January 1, 2014, the withholding tax on nonresident corporations is 20%. 11

14 France tax Gains Exempt or 33% Yes Exempt Gains derived by nonresidents from the disposal of French shares may be taxable in the following situations: Dividends 30% 15% Interest Exempt 15% Real estate companies Substantial ownership Germany tax Gains Exempt Yes Exempt Dividends % or % 0%, 5%, or 15% In some special cases, nontreaty residents may be able to claim a refund equal to 40% of the tax withheld, in which case the effective should be reduced to %. A treaty- generally qualifies for a reduced tax of 15% or 5% (if the participation is at least 10%) or 0% (if the participation is at least 80% for >12 months and other requirements, e.g., limitation of benefits (LOB) clause, are met). Interest Exempt or % German-sourced interest may be taxable at % if it would be interest paid on: (i) convertible bonds, profit-sharing bonds and participating loans; (ii) debt secured by real estate; or (iii) OTC. 12

15 Greece tax Gains Exempt Yes No Relief Nonresident entities without a permanent establishment in Greece may argue they are not subject to tax on the disposal of Greek securities. Dividends 15% No Relief Interest Exempt or 15% Exempt or 15% No withholding tax should be levied on interest derived from government bonds and treasury bills. Any other interest payments should be subject to 15% withholding tax. The U.S.-Greece treaty provides that Greeksource interest may be exempt if the interest charged is not in excess of 9% per annum (on the condition that specific requirements are fulfilled). Hong Kong Has country concluded a tax Gains Exempt No N/A Dividends Exempt N/A Interest Exempt N/A 13

16 Hungary tax Gains Dividends Interest Exempt or 9% Exempt Exempt Yes. Once ratified by the Senate, the Treaty signed on 4 February 2010 should replace the 1979 treaty that is currently in force. Exempt N/A N/A Nonresident companies should be subject to tax at 9% on gains derived from the sale of real property holding companies (underlying Hungarian properties) that are not listed on a regulated stock exchange. Iceland tax Gains 18% Yes Exempt Dividends 18% 15% Interest 10% Exempt Interest generally should include gain on sale of bonds. Interest paid by the Central Bank of Iceland, in its own name or on behalf of the government of Iceland, generally should be exempt. Bonds issued by financial institutions and energy companies should also be exempt if the bonds are registered on a bond market in one of the OECD countries within the EEA, European Free Trade Association, or the Faroe Islands. 14

17 India tax Stated? Gains 0% or 15% or 30% Yes No Relief Gains derived by portfolio nonresident companies on the sale of shares may be taxed. The tax for short-term gains should be 15% provided the Securities Transaction Tax (STT) has been levied. Longterm gains should be exempt provided the STT has been levied. Note that the applicable tax should be increased by a surcharge of 0%, 2%, 5%, 10%, or 12% depending on and type of foreign. The applicable tax should also be increased by a 3% Education Cess. General anti-avoidance rule provisions are applicable from April 1, Dividends Exempt or % 25% or 15% There should be no withholding tax on dividends payable to a nonresident. However, the Indian payer of such dividends must pay a Dividends Distribution Tax (DDT). DDT should be payable at the of %. Interest 5% or 20% 10% or 15% Interest paid to nonresident portfolio s should generally be subject to withholding tax at a of 20%. However, interest payable to certain specified Foreign Portfolio Investors on investments in a rupeedenominated bond of an Indian Company or government securities from June 1, 2013 to June 30, 2020 should be taxed at a reduced of 5%, subject to fulfillment of certain conditions. Note that the applicable tax should be increased by a surcharge of 0%, 2%, 5%, 10%, or 12% depending on and type of foreign. The applicable tax should also be increased by a 3% Education Cess. 15

18 Indonesia tax Gains 0.1% Yes Exempt A 0.1% final tax should be imposed on the proceeds from disposal of publicly listed shares. Dividends 20% 15% Interest 20% 10% Interest should generally include gain on sale of government and corpo bonds. Ireland tax Gains Exempt Yes N/A Dividends 20% or 0% 15% or 5% 0% may apply if the beneficial owner is a resident of EU or a country with a tax Ireland; some conditions apply. Interest 20% or 0% 0% Some domestic exemptions from interest withholding tax include interest paid on government securities and quoted Eurobonds. 16

19 Israel tax Gains Exempt Yes Exempt Dividends 25%, 20%, or 15% 12.5% under certain conditions Dividends deriving from Industrial Enterprise (also known as an Approved/Beneficial/Preferred Enterprise) s are eligible for a reduced withholding tax of 20% (non-u.s. resident) or 15% (U.S. resident). Interest Exempt, or 25%, or 15% Up to 17.5% Interest deriving from exchange-traded securities (except for government bonds that mature within 13 months) or bank deposits should be exempt. Italy tax Gains Exempt or 13.95% Yes Exempt Tax may apply if substantial participation in an Italian-listed company (i.e., shares representing more than 2% of the Italian company s voting rights or 5% of its capital) and subject to an effective tax of 13.95%. Dividends 26% 15% Effective July 1, 2014, a 26% withholding tax should apply. Interest 12.5%, 20%, or. 26% 10% Effective July 1, 2014, a 26% withholding tax should apply. Government bonds should be subject to a 12.5%. 17

20 Japan tax Gains Exempt or 24.43% Yes Exempt or 24.43% Dividends 20.42% or % 0%, or 5%, or 10% (depending on s status) Interest 20.42%, or %, or Exempt Lower of Nontreaty Rate or 0% or 10% (depending on s status) Gains arising from the disposition of shares may be subject to a 24.43% tax under the land-rich company principle (5% shareholding threshold for listed companies or 2% for nonlisted) or the substantial ownership principle (25% shareholding or 5% disposal thresholds). The should decrease to 24.22% for the fiscal year beginning from April 1, 2018 to March 31, The general withholding tax on dividends should be 20%; however, the 15% generally applies on dividends paid by listed companies. A special reconstruction surtax of 2.1% should be imposed from January 1, 2013 through December 31, Reduced treaty s should not be affected by the special reconstruction surtax. The 15% should apply to interest paid on government, municipal, corpo bonds, or bank deposits. The 20% should apply to interest paid on loans to an operating business. Exemptions may apply to registered government bonds and certain Eurobonds. Interest on Japanese corpo bonds should also be exempt if such bonds are managed under the Book-Entry System provided certain conditions are met. A special reconstruction surtax of 2.1% may be imposed from January 1, 2013 through 31 December Reduced treaty s should not be affected by the special reconstruction surtax. 18

21 Jordan tax Gains Exempt No N/A Dividends Exempt N/A Interest 10% N/A Withholding tax for nonresident service providers should be 10%. Korea (Republic of) Gains Exempt, or the lesser of 11% of the sales proceeds, or 22% of the net gain tax Yes Exempt Gains realized should be taxable if the nonresident owned at least 25% of the listed shares of the Korean company at any time during the year of the transfer and in the preceding 5 years. U.S. tax treaty exemption may apply unless real estate company. Dividends 22% 16.5% or 11% 11% under the tax treaty should apply when the recipient is a corporation and owns at least 10% of the outstanding voting stock, provided that not more than 25% of the gross of the paying corporation for the prior taxable year consists of interest or dividends and that certain requirements are met. Otherwise, 16.5% should apply. Interest 22%, 15.4%, or Exempt 13.2% Bonds issued by the Korean government, local government, and domestic corporations should be subject to 15.4%. Interest paid on foreign currency denominated bonds issued overseas by the Korean government, local governments, or domestic corporations should be exempt from Korean tax. All other interest should be subject to the 22%. 19

22 Luxembourg Gains 0% or 20.33% (19.26% from 2018 onwards) tax Dividends 15% 15% Interest Exempt Exempt Yes N/A In general, gains from the sale of shares in a listed company should be exempt unless (i) the nonresident owned a substantial participation (more than 10% of share capital) in the Luxembourg-listed company and (ii) the period between acquisition and disposition is less than 6 months. Malaysia tax Gains Exempt No N/A Dividends Exempt N/A Interest 15% N/A Interest on certain government and corpo fixed- securities may be tax exempt, including fixed- securities issued by the Malaysian government and fixed- securities approved or authorized by the Securities Commission 20

23 Mexico tax Gains 10% or 40% Yes Exempt In general, nonresidents that realize gains on the transfer of listed shares through the stock exchange should be subject to a 10% tax. However, there may be an exemption available under the applicable tax treaty. Dividends 10% Exempt or 5% or 10% Interest Exempt, 4.9%, or 40% Lower of Nontreaty Rate or 15% Tax havens may be subject to a 40% tax. A 10% withholding tax should apply to dividends that arise from earnings obtained starting U.S.-Mexico tax treaty: 10% general, but may be reduced to 5% if the beneficial owner is a company owning directly at least 10% of the voting stock of the company paying the dividends. It should be exempt if the beneficial owner is a company that owns 80% of voting shares during the previous 12 months and complies with the LOB clause. A 4.9% withholding should apply on interest from bonds or securities that are regularly and substantially traded on a recognized securities market. Interest on government bonds should be generally exempt. Tax havens may be subject to a 40% tax. Morocco tax Gains Exempt Yes N/A Dividends 15% No Further Reduction Interest 10% No Further Reduction The withholding increased to 15% in Interest on government bonds may be exempt from withholding. 21

24 Netherlands Gains 0%, 20% or 25% tax Dividends 15% 0% or 5% or 15% Yes N/A 0% applies if less than 5% ownership. Otherwise, 20% or 25% tax may apply. If the provisions of the U.S.- Netherlands tax treaty are met, no tax should apply. Otherwise, 5% or 15% tax. Interest N/A N/A No withholding tax on interest except for payments on certain profit participating loans in which case dividend withholding tax may apply. New Zealand tax Gains 28% Yes Exempt Gains likely to be taxable. Dividends 30% or 15% 15% The 15% nontreaty should apply if the dividend is fully imputed. Note: assumes a shareholding of less than 10%. Interest 15% or 0% Lower of Nontreaty Rate or 10% The 0% nontreaty should apply where the issuer has been granted Approved Issuer status. Nigeria tax Gains Exempt or 10% No N/A Gains from the disposal of long-term corpo bonds should be subject to 10% Dividends 10% N/A Interest Exempt N/A 22

25 Norway tax Gains Exempt Yes N/A Dividends 25% 15% Interest Exempt N/A Oman tax Gains Exempt No N/A Gains from the sale of shares registered on the Muscat Securities Market should be exempt. If not registered, likely taxable only if the foreign company has taxable presence (permanent establishment). Dividends Interest 10% (effective, February 27, 2017) 10% (effective, February 27, 2017) N/A N/A Oman has a Free Trade Agreement with the United States. 23

26 Pakistan Gains 30%, 20%, 18%, 16%, 15%, 12.5%, 11%, or 7.5%, or Exempt tax Yes Treaty Does Not Alter Domestic Rules Dividends 20% or 12.5% Treaty Does Not Alter Domestic Rules For shares acquired after July 1, 2016, a 15% tax should apply to tax return filers and a 20% tax should apply to tax return non-filers. For shares acquired prior to July 1, 2016, the applicable tax varies depending on holding period and whether filer or non-filer. Bonds should be taxed at a 30%. Non-filers should be subject to a 20% tax, and filers should be subject to a 12.5% tax. Interest 17.5%, 10% or Exempt Treaty Does Not Alter Domestic Rules Non-filers should be subject to a 17.5% tax, and filers should be subject to a 10% tax. Some exemptions may apply. Peru Gains Exempt, 5% or 30% tax Dividends 5% N/A Interest Exempt, 4.99%, or 30% No N/A Generally, if listed and traded on the Peruvian stock exchange, gain should be subject to a 5% tax. If not, the applicable should be 30%. From January 1, 2017, a temporary exemption was introduced for sales on the Peruvian stock exchange when certain requirements are met. N/A Various s may apply depending on the type of interest. Government bond interest should be tax exempt. The payment of interest to an overseas entity may be subject to the following s of withholding tax: 4.99% on certain loans 30% otherwise. 24

27 Philippines tax Gains 0.5%, 5%, or 10% Yes Exempt 0.5% transfer tax should apply on the gross proceeds from sale of listed shares in the Philippine Stock Exchange. Unlisted shares should be subject to a 5% final tax on the first PHP 100,000 net gain, and 10% thereafter. Under Republic of the Philippines-U.S. Tax Treaty, nonresidents should not be subject to Capital Gains Tax on unlisted shares, unless the shares are those of a corporation at least 50% of whose assets consist of real property in the Philippines. Dividends 30% or 15% 25% or 20% The 30% should be reduced to 15% if the recipient s country of residence provides a tax credit of at least 15% or does not impose tax on dividend. Tax treaty preferential s of 25% or 20% may apply. Interest 30% or 20% 15% or 10% The 20% would apply on interest from any currency bank deposit, deposit substitute, trust funds and similar arrangements and royalties, otherwise the 30% should apply. Tax treaty preferential s of 15% or 10% may apply. Poland tax Gains 19% Yes Exempt Dividends 19% 15% or 5% 5% withholding tax on dividends should be applicable if the recipient holds at least 10% of shares of the company paying the dividends, in other cases 15% may apply under the tax treaty. Interest Exempt or 20% 0% Interest on Polish government bonds issued on foreign markets should be exempt. 25

28 Portugal tax Gains 25% Yes Exempt 25% tax should apply to tax- haven residents. Dividends 35% 15% 35% should apply if paid to a taxhaven resident or an unidentified recipient. Interest 0% or 35% 10% Interest on certain debt may be exempt for residents in a country that did sign an exchange of information agreement with Portugal. Cayman has an exchange of information agreement in force with Portugal. The 35% should apply to a tax-haven resident or an unidentified recipient. Romania tax Gains 16% Yes Exempt Dividends 5% 10% Interest 50%, 16% or 0% 10% In general, the withholding should be 16%; however, interest on government bonds and debt instruments issued by the Romanian National Bank may be exempt. An increased withholding tax of 50% applies for (interest, royalties, commissions, and services) paid to a country with which Romania has not n exchange of information treaty and as long as the transactions qualify as an artificial transaction (those which do not have an economic purpose, are not carried out in the normal course of business and their only purpose is to avoid taxation or obtain undue fiscal advantages). 26

29 Russia tax Gains 20% or Exempt Yes Exempt Gains from the sale of real estate companies likely to be taxable at 20%. Dividends 15% 10% or 5% A reduced tax of 10% should apply to U.S. s after a tax residence certificate is submitted to the tax agent prior to the date of payment. A further reduction to 5% tax may be available if the U.S. (beneficial owner) is a company that owns at least 10% of the voting stock (or if there is no voting stock, at least 10% of the statutory capital) of the company paying the dividends Interest 0%, 20%, or 30% Exempt Interest paid through a foreign nominee to a nonresident should be subject to withholding tax at 30%. A 20% withholding tax may apply if the tax agent has been provided with information regarding the holder of the interest, the number of securities, and the country of residence of the holder. There should be no obligation on tax agents to withhold tax on government bonds held by nonresidents. According to the Russia-U.S. DTT, 0% withholding tax should be applied to interests earned by U.S. s. 27

30 Serbia tax Gains 20% No N/A Dividends 20% N/A Interest 25% or Exempt N/A Tax should be withheld at source. For residents of low-tax jurisdictions with preferential tax systems (e.g., Cayman Islands), the should be 25%, effective December 26, Effective January 7, 2012, interest on bonds or debentures issued by the government or the National Bank should be exempt. Singapore tax Gains Exempt No N/A Dividends Exempt N/A Interest 15% or Exempt N/A Certain exemptions for nonresidents without a permanent establishment in Singapore may apply, including a possible exemption from withholding tax on interest derived from qualifying debt securities issued between February 27, 1999 and December 31, 2018, and from qualifying project debt securities issued between November 1, 2006 and December 31,

31 Slovakia tax Gains 21% Yes Exempt Gains generally are taxed at a 21%. Dividends 35% Exempt Dividends generally are taxed at a 35%. (entities) or 7% (individuals) Interest Exempt or 19% 0% Interest on government bonds and treasury bills paid to a nonresident is likely to be tax exempt. Interest derived from securities (other than government bonds and treasury bills) paid to a nonresident is likely to be subject to a 19% withholding tax. Slovenia tax Gains Exempt Yes N/A Dividends 15% 15% Interest 15% 5% Interest on government debt should be exempt from tax for foreign institutional s. 29

32 South Africa tax Gains Exempt or 22.4% Yes Exempt Gains generally exempt from tax to the extent that the non-resident does not have a permanent establishment in South Africa. Otherwise, a 22.4% tax may apply. Dividends 20% (15% prior to February 22, 2017) Interest 15% 0% unless anti-avoidance provisions apply Spain tax Under the tax treaty, no tax should apply unless it is a real property company or the nonresident has a permanent establishment 5% or 15% Under the tax treaty, the 5% reduced may apply if substantial ownership. A 15% withholding tax should apply to interest. Certain portfolio interest, including that arising from government bonds and listed debt instruments, should be exempt. Gains 19% Yes Exempt Gain generally should be taxable at 19%. Under the U.S.-Spain tax treaty, gain should be exempt unless is substantial ownership or land-rich shares. Dividends 19% 15% or 10% Under the U.S.-Spain tax treaty, a tax of 10% should apply if the beneficial owner is a company owning at least 25% interest of the company paying the dividends. A tax of 15% should apply to all other cases. Interest 19% or Exempt 10% or Exempt Interest may include gains on the sale of debt instruments in certain cases. Current applicable tax should be 19%. Certain specialties may apply in the case that the source of the is the region of Basque Country or Navarra (in any case the tax should be about 19% 21%). Government bonds and interest paid to EU residents should be exempt. A reduced of 10% should apply under the U.S.-Spain tax treaty. Exemption may apply in certain cases. 30

33 Sri Lanka tax Gains Exempt Yes N/A Dividends 10% (14%, effective April 1, 2018) N/A Interest 10% (5%, effective April 1, 2018) or Exempt 10% Generally, 10% (5%, effective April 1, 2018) should apply. Exemption may apply on certain publicly traded bonds and crossborder debt instruments. Sweden tax Gains Exempt Yes N/A Dividends 30% 15% The definition of dividends under Swedish Withholding Tax Act also covers certain dividend-like payments, such as share redemption payments, etc. Interest Exempt N/A Switzerland tax Gains Exempt Yes N/A Dividends 35% 15% Tax treaty-reduced s require filing for a refund. Interest 35% or Exempt 0% Interest payments on certain qualifying write-down bonds and contingent convertible bonds (CoCos) are generally exempt from withholding tax, if issued between 2013 and Tax treaty-reduced s require filing for a refund. 31

34 Taiwan tax Gains Exempt No N/A Nonresident corpo shareholders with no permanent establishment in Taiwan should be exempt from tax or alternative minimum tax on the gains arising from the sale of listed shares, futures, or options. Dividends 20% N/A Interest 15% or 20% N/A Interest derived from certain corpo bonds, government bonds, shortterm commercial paper, and securitized loan should be subject to a 15% tax. All other interest is likely to be subject to a 20%. Thailand tax Gains 15% Yes N/A Tax should be withheld at source if the purchaser or broker is a resident of Thailand. If neither the purchaser nor the seller are Thai residents, and the transaction is executed and the payment is made outside of Thailand, then the withholding tax provisions should not apply and such transaction should be considered outside the Thai tax regime. Dividends 10% No Further Reduction Interest 15% 15% or 10% Interest on all government bonds was exempt from tax before October 13, Effective October 13, 2010, government bonds issued by certain state owned enterprises became taxable. 32

35 Turkey tax Gains Exempt Yes Exempt Gains derived by nonresident companies from the disposal of shares listed on the Istanbul Stock Exchange should generally be exempt from Turkish tax. Dividends 15% No Further Reduction Foreign s must submit a certificate of tax residency in order to be eligible for the current exemption from gains tax. Interest Exempt No Further Reduction Interest on government bonds, Treasury bills, Eurobonds, and traded corpo bonds issued after January 1, 2006 should be generally exempt. However, please refer to the prospectus of the particular debt offering. United Arab Emis tax Gains Exempt No N/A Dividends Exempt N/A Interest Exempt N/A 33

36 United Kingdom tax Gains Exempt Yes Exempt Dividends Exempt N/A No withholding tax on dividends should be paid by a U.K. company. Interest 20% or 0% 0% Interest on quoted Eurobonds should be exempt from withholding tax. United States tax Gains Exempt N/A N/A Gains realized by nonresident s are generally exempt from U.S. tax. However, tax may apply if shares are treated as U.S. real property interests. It is also important to note that offshore funds may suffer material adverse U.S. tax consequences unless the fund (i) timely and properly registers with the Internal Revenue Service under the Foreign Account Tax Compliance Act (FATCA), and (ii) complies with all related due diligence, withholding and reporting obligations imposed under the FATCA regulations and any applicable intergovernmental agreement (IGA). Dividends 30% N/A See note on FATCA, above. Interest Exempt or 30% N/A Nonresidents should generally be exempt from U.S. tax on portfolio interest. If nonqualifying interest, the applicable should be 30%. See note on FATCA, above. 34

37 Venezuela tax Gains Exempt, 1%, 15% or 34% Yes Exempt Gains from the alienation of publicly traded shares on the Venezuelan stock exchange should be subject a 1% transaction tax on the gross proceeds. OTC transactions should be subject to tax at s ranging from 15% to 34%. Bonds generally taxable at ranging from 15% to 34%, but exemptions may apply. Dividends 34% 15% or 5% Only dividend distributions in excess of taxable profits of the distributing company are subject to withholding tax. The withholding tax should be increased to 50% for hydrocarbon companies and 60% for mining companies. Interest 34% 10% or 4.95% The 34% should be applied to 95% of the gross payment resulting in an effective of 32.3%. 35

38 About the author Carles Farre is a Tax principal in KPMG s International Tax practice and focuses on helping clients in the asset management industry. His clients consist of asset managers that include pension plans, hedge funds, private equity funds, venture capital funds, mutual funds, broker-dealers, and investment advisers. He has extensive experience addressing complex U.S. and foreign country tax issues affecting his clients. Carles leads delivery of KPMG s GTT Services that address sourcecountry taxation of investments and the related in-country compliance obligations. KPMG professionals who provide GTT Services work with KPMG International member firms to focus on the taxation of global securities and over investments, including monitoring related tax developments, across more than 150 countries. 36

39 Contact us Carles Farre KPMG LLP Principal, International Tax New York T: E: Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates. kpmg.com/socialmedia The information in this article is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230 because the content is issued for general informational purposes only. The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. NDPPS